Pre-budget Report (Scottish Government Response)
The next item of business is a statement by John Swinney on the Scottish Government's response to the pre-budget report. The cabinet secretary will take questions at the end of his statement and there should therefore be no interventions or interruptions.
I welcome the opportunity to present the Scottish Government's response to the pre-budget report that was announced by the Chancellor of the Exchequer on Monday. Before I do that, I want to set the response in the context of what the Scottish Government is already doing to help businesses and households in these challenging economic times.
As we heard in our debate on the economy on 12 November, for many people in Scotland this is the most difficult economic climate that they have faced for more than a generation. For other people, particularly our young people, these are the hardest economic times that they have experienced. Rising commodity prices and the credit crunch have weakened advanced economies throughout the world and there is every likelihood that the United Kingdom is already in recession.
The Scottish Government might not be able to prevent recession, but it is doing everything in its power to lessen the financial pain on Scottish households and businesses. Increasing sustainable economic growth has been the Government's overarching purpose since it was established. In these challenging economic times, that mission assumes even greater importance and requires us to help businesses and communities across Scotland through the downturn, while investing for a strong and sustained recovery.
Through our Scottish budget, which was agreed by Parliament earlier this year, we have already invested more than £30 billion of public funds to deliver our purpose of increasing sustainable economic growth. We have taken measures to ease the pressures on tight household budgets by working with local authorities to freeze council tax, and we will provide funding to allow councils to implement further freezes for the next two years. That represents a real-terms cut in costs for families, compared with the average council tax increase of 3.9 per cent south of the border. We have introduced beneficial measures to reduce business rates through the small business bonus scheme, which is benefiting thousands of Scottish businesses.
Of course, that action was taken before the global economic downturn took effect and, long before the current downturn, we took other action into the bargain. By progressively abolishing prescription charges, removing bridge tolls and scrapping the graduate endowment fee, we are putting more money into the pockets of ordinary, hard-working Scots—much more than any Government before us has done.
However, in these exceptional economic circumstances, we have a duty to consider what more we can do. That is why, during the summer, we developed our economic recovery programme to boost Scotland's economy. Our programme includes a commitment to reshape capital expenditure to advance the investment of £100 million, this year and next, in affordable housing projects. We have already allocated £180 million of commitments from the European structural funds programme and we will take decisions to accelerate the commitment of finance from the remaining £385 million in the programme. I have indicated to Parliament that £50 million of investment in employment in Scotland has been undertaken and that it is expected that the programme will be expanded to tackle unemployment in these tough times.
In the current economic circumstances, our £35 billion, 10-year infrastructure investment plan is also delivering, with £14 billion being invested in schools, hospitals and transport during the current spending review period. We are reshaping our capital expenditure to invest £25 million in the home owners support fund, to help people who face the prospect of having their home repossessed. We are intensifying our support for homecoming 2009. Elsewhere in the Government, we continue to ensure that all our activity, including activity on planning and regulation, supports economic development. At the same time, we are building on our existing work on energy efficiency and fuel poverty and we are putting an extra £10 million into the free central heating programme this year. We are also increasing advice to businesses and individuals. We are doubling the size and capability of the Scottish manufacturing advisory service, to ensure that even more companies can access quality advice.
While taking that action, this Government will continue to stand up for Scotland, to ensure that we get a fair deal from the UK Government. We have been making the case for the UK Government to deliver a package of further tax cuts and increased public expenditure to respond to the current economic conditions. That is why we welcome a number of elements of the direction that the UK Government has taken to get the economy moving. The spending plans that are outlined in the pre-budget report will have a beneficial effect on the construction sector and on a variety of other sectors in the Scottish economy.
In particular, we are pleased that the UK Government has provided the flexibility to allow for the acceleration of capital spending. The £260 million from 2010-11 that Scotland is able to bring forward into this year and next will help to boost our capital expenditure at a time when support for the construction and investment sectors is required the most. The Scottish Government intends to use the opportunity to accelerate capital spending further and the Cabinet has decided to use the facility to the maximum. We intend to give the highest priority to capital spending on new and improved school buildings, helping to create a 21st century environment in which Scottish children can learn and providing greater classroom capacity. We will look at accelerating investment in transport infrastructure and projects to boost fuel efficiency.
We will examine further opportunities to advance investment in housing regeneration and projects to address fuel poverty and energy efficiency. We will consider supporting improvements in the further education estate, again concentrating on energy efficiency, and in support of health service projects. We will also consider further options with a view to ensuring that we select capital spending projects that maximise a positive impact on jobs, business and the economy, promote excellent public services, and contribute to our sustainability objectives.
We will bring to Parliament soon our detailed proposals for allocating the Scottish consequentials from the pre-budget report. We will do that once we have completed discussions on the practical steps to accelerate specific projects with our partners, particularly local authorities, which will have a major role in ensuring that we achieve maximum impact. We must also consider the proposals within the significant changes that we expect to the 2010-11 budget as a result of the pre-budget report. We will also seek Treasury support for our proposals.
Although the acceleration of capital spending is welcome, other elements of the pre-budget report give us cause for concern. First, although the measures to help companies that the chancellor announced on Monday will provide some assistance for our small businesses, many small businesses will continue to pay more in corporation tax than they did two years ago.
Scottish businesses are still feeling the impact of measures that were announced in previous budgets. Since 2007, the small company corporation tax rate has increased from 19 to 21 per cent. That is having a negative effect on many small and medium-sized companies that are vital to our constituencies and the Scottish economy as a whole. It is a UK Government policy that cuts across the Scottish Government's efforts to support our SMEs through the reductions in business rates this year and, for many in the coming year, the removal of business rates entirely.
Our second concern relates to VAT and energy costs. Although the cut in VAT is welcome, it could have been more focused. We have seen from the initial public reaction that there is a widespread sense that the cut is not enough to impact on public confidence and spending in our high streets. We will continue to monitor retail activity in that respect.
The Scottish Government believes that targeted action on VAT to help people struggling with fuel bills and to boost the housing sector was required, but the chancellor's announcement on Monday did nothing to address those issues. At a time when fuel bills have increased by 38 per cent since the start of the year, we need decisive action to help households. Removing VAT on domestic heating this winter would have been a better and more effective choice.
Our third concern relates to duties. This Government opposes the 2p increase in fuel duty and the unwelcome increase in duty on Scotch whisky. The fuel duty increase will be offset by the reduction in VAT in the short term but, in the long term, the increase will have serious consequences for Scotland, particularly for our rural and island communities. It is a classic case of giving with one hand and taking away with the other. The hardship that is being placed on those communities is unacceptable, particularly as the chancellor announced on the same day record revenues from oil and gas off our shores.
The record duty on Scotch whisky is a significant tax blow to an industry that generates export income and delivers jobs across our country. I welcome reports that the chancellor is to think again on the duty hike—he may in fact be making remarks to that effect in the House of Commons as I speak—and I await with interest the details of any changes to his pre-budget plans.
This Government recognises the specific needs of rural Scotland, the pressures on our hauliers and the interests of our more important industries. Events overnight suggest that it is possible to force a change of direction, which should encourage all members to highlight even more strongly the impact of fuel duty increases on rural Scotland.
I will make one further point about the chancellor's announcement on Monday. It cannot have escaped even the most enthusiastic supporters of the UK Government that the plans that he set out will mean a significant reduction in Scotland's public spending in 2010-11 and beyond. In fact, they mean the biggest cut in Scottish spending since devolution at the same time as the Treasury confirmed record oil revenues of £13.2 billion for this year and forecast a North Sea income of £55 billion over the next six years.
On Monday, the chancellor announced his plan to reduce capital spending on health in England and Wales, which will, through the Barnett formula, reduce Scotland's baseline by £129 million in 2010-11. At the same time, he announced that he was top slicing £5 billion from public spending programmes across the UK in 2010-11. His intention is to let the Treasury keep those savings. Taken together, those measures mean that the UK Government proposes a cut in Scottish spending of up to £500 million in financial year 2010-11 and approaching £1 billion over the next two years.
Members have spent some time in recent months focusing on the 2 per cent efficiency savings that the Scottish Government proposes. Those are real efficiency savings. They must pass stringent tests to be acceptable, and we reinvest them in public services in Scotland. I hope that members will now spend as much time focusing on the impact on vital public services that will follow from a crude cut in Scotland's budget by the UK Treasury. What was already the tightest settlement from Westminster since devolution has just become tighter still. We remain deeply concerned that the chancellor's proposals could cause difficulty for Scotland when we are trying to get the economy to recover. Clearly, that is unsustainable. This Government will do all that it can to overturn the UK Government's decision—a decision that will put at risk projects in every part of Scotland. I hope that the Parliament will support us in our efforts.
We are working hard for Scotland, using all the levers at our disposal. That is reflected in our programme to support Scottish economic recovery. We acted early, have set a clear course and will work continuously to refocus and retune our activities to maximise their impact. We also welcome many of the steps that the UK Government has taken and pledge to make use of the full extent of the facility for capital flexibility. I will continue to press the UK Government on more targeted action as we look towards the budget next year.
I have made it clear to Parliament that the decision to remove up to £500 million of spending in 2010-11 and approaching £1 billion over two years poses a real threat to vital public services in Scotland. This Government will work tirelessly to reverse that decision.
The cabinet secretary will now take questions on issues that were raised in his statement. I will allow around 30 minutes for such questions, after which we must move to the next item of business.
It is a pity that the Cabinet Secretary for Finance and Sustainable Growth's conclusion was not matched by any content and detail in his statement that would lead us to believe that the Government actually has a grip on the issues facing Scotland.
I thank the cabinet secretary for an advance copy of his statement. I welcome some of his supportive remarks regarding the UK Government's leading change and addressing key global economic crises not only in Europe but, of course, in the world. Can the cabinet secretary confirm, as he acknowledged in his letter to the Finance Committee, that his sole measure up to 18 November in response to the economic crisis was to bring forward £100 million from 2010-11, of which only £9 million had been committed? Does he agree that that is an inadequate response?
Talking of inadequate responses, today there is little that is new in the Scottish Government's strategy to address the global crisis. We have references to new money being made available to Scotland, but nothing further on the measures that the Scottish Government will take. We have a broad indication, but no detail, of the measures that are to be rolled out. Unbelievably, there is no list of projects that are ready for implementation—utter dithering by the Scottish Government. Indeed, the cabinet secretary has given us no detailed spending plans today. Why do we have to wait even longer? Does he not know that there is a global economic crisis?
Labour has been asking the Scottish National Party Government for weeks to bring forward capital projects, prioritised on the basis that they will protect Scottish businesses and jobs. For weeks, the Cabinet Secretary for Finance and Sustainable Growth has claimed that the Treasury will not let him do that. However, the Chancellor of the Exchequer has publicly stated:
"the Scottish Executive could re-profile their spending, if they wanted to. We have made that clear since September."—[Official Report, House of Commons, 24 November 2008; Vol 483, c 518.]
I would hate to think that the cabinet secretary is playing politics with the global economic crisis and the situation that Scotland faces, so can he simply tell members when he wrote to the Treasury asking for agreement to bring forward capital spending from 2010-11 for immediate use?
Finally, will the cabinet secretary confirm that the £129 million of health spend that he referred to can and should be recouped by underspend over the next two years? Does he agree that, once that figure is removed, the required efficiency saving is less than 0.5 per cent? Of course, that must be balanced against a serious and substantial package of measures to protect the Scottish economy.
I thank Mr Kerr for his contribution and for the significant number of questions he asked, which I will endeavour to answer.
Mr Kerr has to recognise—like anyone who listened to my contributions to the Finance Committee when I appeared before it and to the debate in Parliament on the economic situation—that the Government has taken a variety of measures to ensure that Scotland is better equipped to deal with the economic downturn. Mr Kerr mentioned one of them, which is the acceleration of affordable housing expenditure. I referred in my statement to, for example, support for the planning regime, the expansion of the manufacturing advisory service, and a variety of other interventions that the Government has made. I mentioned that range of interventions in my statement to demonstrate that, since the summer, this Government has reflected on and changed its programme to ensure that we are equipped to do as much as we can to address the situation.
Mr Kerr asked why I have not outlined a list of capital projects to Parliament today. The reason is simple: we got the information from the chancellor only on Monday afternoon.
So almost nothing new since the crisis started.
I will come to Dr Simpson in a second, if he waits patiently.
We do our business in a different fashion from that of the previous Administration: we talk to our partners in local authorities to get agreement on how we intend to proceed.
Mr Kerr asked me some specific questions, particularly about remarks that the chancellor put on the record last night about how we were given notice from September that we could reprofile capital expenditure. I will share with members information about that, because I think that the chancellor was in danger of misleading the public.
The chancellor is correct that we received a message from the UK Treasury in September, which said that, in response to changes to the profile of expenditure for the Department for Communities and Local Government in England, it had advanced some affordable housing expenditure. A Treasury official wrote to my officials, saying:
"We would be prepared to consider recommending a consequential reprofiling to the Chief Secretary to the Treasury if justified … However my understanding is that the Scottish Executive have already announced a housing package in August within your existing settlement, so it is not clear that a reprofiling is justified."
Did the cabinet secretary justify it?
Just a second.
In that note, the Treasury said that the Scottish Government was ahead of the game in bringing forward affordable housing expenditure. What it says, Mr Kerr, is that we got there first. We planned the acceleration of affordable housing expenditure before the UK Government got anywhere near doing so.
In addition, on 21 October, the First Minister and I raised with the Secretary of State for Scotland our desire to accelerate capital expenditure. We reinforced that in a letter to the secretary of state on 11 November. We reinforced the point again in a letter to the Chancellor of the Exchequer on 20 October. I am delighted that the chancellor responded on Monday by reprofiling capital expenditure to allow us to take the action that we are taking. Far from my playing politics, I think that the UK Government and Mr Kerr are playing politics with the economic situation.
Mr Kerr also asked about the £129 million cut in the Scottish Government's budget as a consequence of the reduction in the budget of the Department of Health in England. He is correct that, if sufficient end-year flexibility is available, we will be entitled in the first year to match that £129 million cut with money that we have not spent, but that means that money that we would ordinarily be able to provide as additional public expenditure will be required to compensate for cuts from the UK Treasury. That is the reality of the position.
Finally, let me come to efficiency savings. In last week's debate, Cathy Jamieson and Richard Simpson—the duo are sitting together today—attacked the Scottish Government for its efficiency savings programme, which they said would lead to widespread cuts around the country. Today, they are defending a £0.5 billion cut in Scottish public expenditure. They should be ashamed of themselves.
I thank the cabinet secretary for the advance copy of his statement. It will be of no comfort to him that he now has something substantial in common with the Conservative party, in that he must pick up the pieces after a Labour Government has made a complete hash of things. The public will have an opportunity soon enough to cast their views on the most expensive and incompetent Labour Government in history—which is saying something—so let me turn to what the Scottish Government can do.
The cabinet secretary stated that he will prioritise capital spending on the basis of three criteria. Should not the only criterion—or, at the very least, the main criterion—be the impact on jobs and economic growth? When he brings forward capital projects, will he also provide details of which projects will not be pursued and what impact they would have had, so that Parliament and the public can fully assess whether the impact on jobs, the economy and growth has been maximised?
In my statement, I said that we will consider programmes that maximise the positive impact on jobs and the economy. The right thing to do is to determine how we secure the greatest impact by accelerating expenditure. Clearly, in accelerating capital expenditure, what we spend in 2008-09 and 2009-10 must be recouped from 2010-11. The 2010-11 budget will be undermined by the scale of any consequential reductions in the Scottish Government budget that flow from the change to Department of Health funding and from the additional element of supposed efficiency savings that are to be applied by the UK Government. We will set out the details of our proposals so that Parliament can scrutinise them in the context of the budget. Any revisions to the budget in the spring or autumn, as well as scrutiny of the impact on the value of projects, will be able to take place within that context.
I, too, thank the cabinet secretary for the advance notice of his statement. In these unprecedented and worrying times for people and businesses across Scotland, hopes that the Scottish Government and UK Government would work together have, I fear, proved to be in vain.
There was too much in the cabinet secretary's statement about SNP plans that were made in 2006, published in 2007 and repeated here in 2008. Why does the cabinet secretary's current budget differ by only 0.3 per cent from that which he published last year?
We needed primary colours from the chancellor on Monday, but we got 50 shades of grey, which the cabinet secretary has successfully blurred even further today.
I have three specific questions. First, does the cabinet secretary agree with Stewart Hosie, who complained on Monday's "Newsnight" that there was no mention of income tax reductions in the chancellor's statement because many businesses do not pay corporation tax?
Secondly, on the £260 million of capital spending that is being brought forward, will the cabinet secretary bring forward investment in the A82 action plan, which is ready to go and can be accelerated?
Thirdly, the cabinet secretary said that he talks to his local government colleagues, so he will be aware that Scottish Borders Council passed a cross-party resolution last week calling for the acceleration of the Borders railway project. Will the cabinet secretary meet representatives of the Scottish Borders Council to ensure that that project is accelerated?
We have accelerated expenditure on affordable housing within our capital allocations, but the Scottish Government's capital allocations in this financial year are fully deployed and being expended on projects that will increase employment and economic opportunities in Scotland. It would therefore be foolhardy to suggest that capital programme projects that are currently under way could easily be redeployed when we are spending the money to deliver maximum economic impact.
I am not sure what point Mr Purvis was making about Stewart Hosie MP. I did not see Mr Hosie's interview on Monday evening, but I will examine it to see whether there are points that I need to confirm. However, Mr Hosie articulates his points of view with great skill and effectiveness in the House of Commons and on the airwaves.
I am glad that Mr Purvis took a more mature approach to the capital programme choices that have to be made than Mr Kerr did. Clearly, the issues need to be discussed with our local authority partners. As it happens, I saw the leader of Scottish Borders Council, Councillor Parker, this morning, and I will see him again this evening, and I will, as always, listen carefully to the points that he raises on behalf of Scottish Borders Council. We will ensure that the changes that we make to our capital programme are designed to maximise economic impact, which I know the member would expect.
We come to open questions. You all know the guidance by now.
Does the Cabinet Secretary for Finance and Sustainable Growth agree that the measures that the chancellor announced on Monday demonstrate the dire financial consequences of managing the Scottish economy from London? Now that the UK has a credit rating second only to that of Italy, is it not the case that an independent Scotland would be far better off than it is under this miserable union with London?
Mr Neil knows that he and I agree that independence would be best for Scotland. The fact that the Scottish Government has had to wait for so long to be in a position to deploy some of the capital flexibility that is needed to deal with the current economic situation illustrates why it is important for the Scottish Parliament to have a full range of economic and fiscal powers. That would allow us to make wise decisions on behalf of the people of Scotland.
I am sure the cabinet secretary will acknowledge that, although unemployment is increasing in Scotland, there are almost 35,000 vacancies. His statement referred to the £180 million of European structural funding that will be used to sustain employment. The UK Government has made similar announcements and established a national employment partnership. Will the Scottish Government seek to engage with that partnership? Will the remainder of the European structural funding and the current funding be used specifically to sustain employment in Scotland?
On Mr Park's first point, the Scottish Government, through our various channels for providing support to people who seek employment and who face unemployment, is well connected to the UK network, particularly in relation to Jobcentre Plus. The fact that there is now an encouraging level of joint working to bring together some of the programmes that we as a Government deploy with programmes that the UK Government deploys means that when someone seeks to access employment, they can access a more integrated service—it would be in their best interests for it to be a fully integrated service—that meets their needs. We must maximise collaboration and co-operation in that respect, which must be focused on the interests of the person who is unemployed. Our colleagues in Skills Development Scotland take forward that work on the Government's behalf.
Mr Park asked about the deployment of European structural and social fund resources. As I outlined in my statement, we have a range of programmes, which total about £50 million. We funded in full the bids by different local consortia to give maximum support to employment, and the Government will continue to seek to advance projects that can be supported by and which meet the criteria of the European funding that is available to support employment. I have made the Government's position clear: we will bring forward as much of that European funding as we can. That resource needs to be spent now to maximise the impact on people in Scotland.
In the light of the chancellor's track record of going back on the taxation increase on whisky and his reversal of his plans to increase VAT to 18.5 per cent, does the finance secretary agree that all members of the Parliament have an opportunity to force another retreat, on the plans to cut Scottish Government spending by as much as £500 million in the final year of the parliamentary session?
It is clear that an opportunity exists to influence UK Government thinking. If I pick up Mr Adam correctly, an announcement has been made on whisky duty; I will wait until I leave the chamber to hear the details of it. If that is the case, we can take the opportunity to persuade the UK Government of the very real difficulties that will be created for public services and public spending in Scotland if we have to remove £500 million from our budget in the third year of the spending review period. That is a highly significant sum of money, and its removal would have a significant effect on public services in Scotland.
Will the cabinet secretary ensure that the accelerated capital expenditure is deployed as quickly as possible, unlike the accelerated money for housing that was announced in August, which no local authority has yet heard about, far less seen? Will he also ensure that the housing money is distributed according to need and with the 2012 homelessness target in mind, so that Edinburgh, which has by far the greatest shortage of affordable rented housing in Scotland, is not overlooked?
The Government has already deployed the first tranche of the affordable housing resources, and announcements will be made shortly on the deployment of the next tranche. I give Malcolm Chisholm the assurance that I gave to the Parliament in my statement: we will work to utilise the full flexibility that has been made available to us following Monday's announcements by the Chancellor of the Exchequer.
As regards where the housing resources should be deployed, ministers will consider the proposals that are made by different areas and judgments will be made that take into account a variety of considerations. Housing need will be very much at the heart of the discussions and considerations on those issues.
According to the Council of Mortgage Lenders, mortgage approvals fell by 18 per cent in the last quarter. As a way of assisting the housing market, which John Swinney today said the Government would do everything in its power to do, will the Government consider a sizeable delay in the implementation of home reports?
Steps have been taken to implement home reports. They are part of a set of reforms that include energy performance certificates, which are a European requirement. The Government has worked closely with all sectors on the implementation of home reports and ministers are engaged fully in discussions about how the reports can be introduced in a way that supports development in the housing market and allows consumers to see the benefit of having access to the information in the reports.
Last week, at question time, the Deputy First Minister said that she was sympathetic to the establishment of a task force for Scottish banking jobs, yet the finance secretary's statement today was silent on the subject. Given the scale of potential job losses in the banking sector, will the Scottish Government give a clear assurance today that it will take urgent and assertive action to do all that it can to protect the sector and to set up a banking jobs task force, as proposed last week by Tavish Scott?
I heard Mr Scott's comments last week, and I appreciate that his proposal was genuinely aimed at tackling what will be a significant issue for the Scottish economy, bearing in mind Scotland's extensive involvement in financial services. I should point out that many financial services companies are still performing extremely effectively in the Scottish economy and contributing to our significant reputation in that respect.
If my recollection is correct, the Deputy First Minister referred to the fact that we already have the Financial Services Advisory Board, which was established by the previous Administration and we have continued. It is a good, focused organisation that brings together companies, the enterprise agencies, the trade unions—crucially—and the Government. Mr Mather, the First Minister and I sit on FiSAB. It is the appropriate forum in which to discuss how we can address the challenges.
If we feel that certain issues are not being or cannot be satisfactorily addressed in that forum, we will consider other proposals. However, the combination of the strategic leadership that FiSAB offers and the day-to-day involvement of our economic development agencies and Skills Development Scotland in supporting individuals who may face unemployment provide services that are appropriate in these times. Nevertheless, I assure Alison McInnes that the Government will consider alternative proposals if we do not feel that the current arrangements are dealing adequately with the situation.
I welcome the plans to bring forward capital spending. However, does the finance secretary agree that it is disappointing that the UK Government chose to invest no new money in affordable housing and that the Scottish Government, while supporting the housing industry as much as it can with the additional £100 million, would be better able to support economic recovery if it had proper borrowing powers?
Mr McMillan will have heard what I said earlier about the investment in affordable housing that the Government advanced in August—the first Administration in the UK to introduce such a measure. We are determined to continue that process of investment in an organised fashion. Clearly, the Parliament would be better able to respond to the current economic situation if it had the full range of financial powers. The Government will work to deliver that aspiration.
Today's statement tells us that the Government is doing everything in its power to lessen the financial pain for Scottish households. Does that mean that the Government will publish its economic recovery plan and present it formally to Parliament? If so, when?
The statement appears to confirm only one new step, which is that the Scottish Cabinet has decided to use capital flexibility to the full. Are there any other new measures that we have not heard about already in the statement, beyond simply promising to spend to the full the money that was announced on Monday?
Wendy Alexander asked about the publication of the Government's economic recovery programme. One of the criticisms of the previous Administration was that every time it felt that it had to do something, it published a document to capture everything that it was doing. This Government tends to operate more efficiently. Perhaps we are the trailblazer for the UK Government and its efficiency savings. Who knows?
We might, in due course, set out the collection of initiatives that the Government is taking to adjust to the economic situation. However, Wendy Alexander should give the Government credit for pursuing, over a series of months, a number of interventions that have strengthened the Scottish economy, accelerated investment, changed practices and improved the process of operation within Scotland. We have set out those interventions to Parliament on a regular basis in debate after debate, and we will continue to do so in the weeks and months to come.
I ask the cabinet secretary to return to the £500 million reduction in the public spending programmes. He said that his Government would seek to influence the Westminster Government to the max—hope should spring eternal. However, can the Government give a factual estimate of the loss of public sector jobs that that reduction is likely to occasion? The timeframe is in line with the possible loss of a great number of jobs due to the proposed takeover—if we are unable to stop it—of HBOS. With that in mind, and considering the diminished tax base that would result, will the cabinet secretary reconsider the introduction of a local income tax?
We await information from the UK Government on the precise application of the proposed £500 million in efficiency savings for 2010-11. We have been advised to expect more information on the distribution at the time of the spring budget next year. We will await that detail in order to ascertain exactly what the impact will be on Scotland, and therefore how we will have to adapt our plans.
Members of this Parliament should be under no illusions: the specific numbers for the commitments that were made for the financial year 2010-11 in the spending review document will have to be revised if the UK Government insists on applying such a significant reduction in public expenditure in 2010-11. We will bring our proposals to Parliament for scrutiny in the normal fashion, as part of the budget process.
We remain absolutely committed to the introduction of a local income tax and we will set out to Parliament in the next few months how we will take forward that policy.
I, too, will ask about the Treasury's imposition of the top-sliced so-called efficiency savings, which, unlike this Government's 2 per cent efficiency savings, will go directly to London rather than be retained for front-line services in Scotland. That is bound to affect public service jobs. The Scottish Government has operated a policy of no compulsory redundancies. Does the Government intend to continue with that policy in future, in light of the Treasury's cash grab?
The Government remains committed to the policy of no compulsory redundancies. It has been an essential part of our constructive relationship with our employees in the public sector, and it is central to the Government's intentions in that respect.
We must be clear about what will happen in 2010-11. The Scottish budget will be reduced. We will have no opportunity to reprofile our activity before that reduction is applied to us by the UK Government. It is not an efficiency saving; it is a routine and rudimentary cut in public spending, and the UK Government should have the good grace to explain that to the Scottish public.